GQG Partners Emerging Markets Equity: update from the manager, May 2023
May 2023 | Chris Salih interviews Chulantha de Silva, the client portfolio manager of the GQG...
With nothing planned for the Easter holidays and the weather still very unspring-like, thoughts in our household have turned towards the summer holidays. But where to go and what to do?
There are so many options it’s hard to know where to start. A beach holiday in Thailand? A cruise around the Med? Sight-seeing in Copenhagen? Or Centre Parcs in The Netherlands? I’d like to do them all, but I don’t have the time or the budget. So, pick one we must.
It’s similar to picking an ISA investment at this time of year: time is running out to use the tax allowance or lose it, but with stock markets decidedly wobbly at the moment, where is the best place to invest?
To help give you some inspiration, here are eight of our favourite funds from all around the world.
Starting close to home, investors looking at opportunities in UK equities this year might like to consider the IFSL Marlborough Special Situations fund, which has a small and mid-cap focus and is co-managed by Eustace Santa-Barbara and Guy Feld. Relatively small positions are usually taken initially, and holdings added to as the team becomes more comfortable with a company and the management delivers on plans.
With a focus on Continental Europe, this fund invests in large companies. The team looks to buy stocks at the point where they are either out-of-favour or where growth prospects are believed not to be fully reflected in the share price. These stocks are generally in one of three categories: those disrupting industries; those dominating their industries; and those with deluxe goods and services.
Over in the US, this fund seeks to invest in large US firms that demonstrate innovation and change and then back them with strong conviction. The manager acknowledges that the US equity market is largely efficient, “so we need to embrace uncertainty and use research to identify likely beneficiaries of disruption that have the best management teams with the most profitable future business models,” he says.
The managers of this fund believe that, despite having a large investment universe, the Japanese market is under-researched and ignored by most international investors. This, they say, provides a great opportunity. Co-manager Sophia Li says she searches for three types of investments: hidden gems; the only fishermen in a blue ocean; and companies with a proven ability to invent the future.
Investors looking for adventure could consider this fund which gives investors exposure to companies in Latin America. It is managed by abrdn’s renowned emerging markets team, whose primary investment concern is whether companies demonstrate outstanding quality characteristics, such as strong management and balance sheets, this is followed by a value approach – targeting stocks which appear to trade for less than they should do. The strategy has had considerable success across the region.
If Asia is more your scene, Schroders’s global scale and high-quality team of analysts provide this fund with an important competitive advantage when investing in the region. The fund has a flexible approach with few formal constraints. The manager looks to exploit stock market inefficiencies, and use some macro input, to build a concentrated portfolio of predominantly larger companies from the Asian region.
GQG Partners is one of the newest and fastest growing asset management businesses, having only launched in 2016. Rajiv Jain, founder of the company and lead manager of this fund, has over 25 years’ investment experience. The fund is a concentrated portfolio of high-quality companies with durable earnings. The emphasis is on future quality, rather than companies which have simply done well historically.
And finally, if you can’t choose one destination why not try them all? An investment gap year if you will! This global equity fund invests in companies from all over the world and has a specific structure which allows the manager to extend investors’ potential returns by buying stocks he expects to do well and also looking to make money on stocks he expects to do badly (shorting). He describes this as “lining up on the starting grid for a motor race with an engine 50% bigger than everyone else’s”.